Costs of room and board

According to the College Board, average room and board costs for the 2017-18 school year were around $10,000 for public 4-year colleges (in-state or out-of-state) and $12,000 for private 4-year colleges, up 3.1% and 3.6% from the previous year, respectively. If costs continue to rise at an annual rate of 3%, total room and board at public 4-year colleges and private 4-year colleges may cost $71,000 and $85,000, respectively. Parents can save for future room and board costs with a tax-advantaged 529 plan.

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Did you know that residents are not limited to investing in their own state's plan? Another state may offer a plan that performs better and has lower fees. Select your state below to see your state's plan and other options.

Find a 529 plan in

Find a 529 Plan. Select your state below.

Did you know that residents are not limited to investing in their own state’s plan? Another state may offer a plan that performs better and has lower fees. Select your state below to see your state’s plan and other options.

For room and board expenses to be considered qualified, the student has to be enrolled in an eligible college program on at least a half-time basis. Qualified room and board costs can include both on- and off-campus housing costs, as long as they were incurred during an academic period during which the student is enrolled or accepted for enrollment in a degree or certificate program or another program leading to a recognized education credential.

Enrollment in a study abroad program counts, so long as it is approved for credit by the student’s home college or university. Rent incurred during the summer months is also considered qualified when the student is enrolled at least half-time.

Paying for room and board with a 529 plan

If the student is living on-campus, their qualified room and board costs will be equal to the actual invoice amount they are charged for housing owned or operated by the college. This typically includes housing costs and a meal plan.

But for students residing in apartments or other off-campus housing, qualified room and board costs must be less than or equal to what is included in the college's cost of attendance (COA) allowance for room and board for the period. The COA estimates a student’s total cost of college in a given year, which includes tuition, fees, room and board, transportation, books, supplies and equipment and other expenses, and is used to determine need-based financial aid eligibility. Keep in mind that not all items included in the college’s COA, such as transportation, are considered qualified expenses for 529 plan purposes.

Students can obtain their school’s room and board allowance for residing off-campus from the college’s website or the financial aid department. The college will typically provide an allowance for those who reside in apartments as well as those who live at home with their parents during the school year. While living off-campus, add up the receipts from any rent, utilities, groceries or other housing expenses each year until you reach the maximum amount for a tax-free 529 plan withdrawal.

When adding up your total 529 plan qualifying expenses for the year (including tuition, fees etc.), don’t forget to subtract any costs used to generate the American Opportunity Tax Credit or Lifetime Learning Tax Credit. Double-dipping with other education tax benefits could trigger a non-qualified withdrawal. Also, be sure to take the distribution in the same year that the qualified expense was paid. 529 plans typically let you distribute funds to the account owner, the beneficiary or the school. Some 529 plans will let you make a payment directly to an off-campus landlord.

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